1 00:00:00,120 --> 00:00:04,360 Speaker 1: Bloomberg is now on your dashboard with Apple CarPlay and 2 00:00:04,360 --> 00:00:08,160 Speaker 1: Android Auto. It gives you access to every Bloomberg podcast, 3 00:00:08,280 --> 00:00:11,559 Speaker 1: live audio feeds from Bloomberg Radio, print stories from Bloomberg 4 00:00:11,600 --> 00:00:14,880 Speaker 1: News in audio form, and the latest headlines of the 5 00:00:14,920 --> 00:00:18,640 Speaker 1: click of a button with Bloomberg News. Now it's free 6 00:00:18,680 --> 00:00:21,400 Speaker 1: with the latest version of the Bloomberg Business App. That's 7 00:00:21,640 --> 00:00:24,360 Speaker 1: the Bloomberg Business App. Get it on your phone in 8 00:00:24,400 --> 00:00:27,720 Speaker 1: the Apple App Store or on Google Play. 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I'm Paul Sweeney alongside 12 00:00:38,600 --> 00:00:39,760 Speaker 2: my co host Matt Miller. 13 00:00:40,200 --> 00:00:44,159 Speaker 1: Every business day we bring you interviews from CEOs, market pros, 14 00:00:44,280 --> 00:00:48,159 Speaker 1: and Bloomberg experts, along with essential market movin news. 15 00:00:48,720 --> 00:00:51,839 Speaker 2: I'm the Bloomberg Markets podcast called Apple Podcasts or wherever 16 00:00:51,920 --> 00:00:55,040 Speaker 2: you listen to podcasts, and at Bloomberg dot com slash podcast. 17 00:00:55,400 --> 00:00:56,960 Speaker 2: Mike Greeg and Paul Sweeney were live here in the 18 00:00:56,960 --> 00:01:00,760 Speaker 2: Bloomberg Interactive Broker Studio or also streaming live on YouTube. 19 00:01:00,800 --> 00:01:03,000 Speaker 2: I believe that's the Internet, So you head over to 20 00:01:03,040 --> 00:01:05,280 Speaker 2: YouTube dot com Search, Bloomberg Radio, and that's where you 21 00:01:05,360 --> 00:01:07,240 Speaker 2: will find this. Mike, I took a look at the 22 00:01:07,280 --> 00:01:09,399 Speaker 2: four one K man. I crushed it this year. 23 00:01:09,720 --> 00:01:11,800 Speaker 3: You were good at this. You were in stocks, I 24 00:01:11,840 --> 00:01:13,240 Speaker 3: take it. Yeah, you were all in. 25 00:01:13,440 --> 00:01:14,520 Speaker 2: Throw it all in the index place. 26 00:01:14,560 --> 00:01:16,279 Speaker 3: You didn't move out to cash and doing. 27 00:01:16,160 --> 00:01:18,039 Speaker 2: After thirty five years, I don't even think about it. 28 00:01:18,920 --> 00:01:21,160 Speaker 2: That's kind of my investment horizon, though that's kind of 29 00:01:21,240 --> 00:01:23,640 Speaker 2: changing as we go along here. But let's talk to 30 00:01:23,680 --> 00:01:25,520 Speaker 2: somebody who really thinks about it a little bit more 31 00:01:25,560 --> 00:01:28,920 Speaker 2: deeply than I do. Gena Martin Adams, chief equity strategist 32 00:01:28,920 --> 00:01:31,200 Speaker 2: for Bloomberg Intelligence, joins us live here in our Bloomberg 33 00:01:31,200 --> 00:01:34,520 Speaker 2: Interactive Broker studio. So Ginette, first of all, explain to 34 00:01:34,560 --> 00:01:37,640 Speaker 2: me what happened from like October nineteenth to year end 35 00:01:37,840 --> 00:01:40,600 Speaker 2: twenty twenty three. Wow, that we had some big moves 36 00:01:40,640 --> 00:01:41,679 Speaker 2: in stocks and bonds. 37 00:01:42,000 --> 00:01:43,800 Speaker 4: Yeah, I mean I think a few things happened. First 38 00:01:43,920 --> 00:01:46,959 Speaker 4: is we were incredibly oversold. Sentiment was very negative. By 39 00:01:46,959 --> 00:01:49,200 Speaker 4: the end of October. Our market pulse index was sitting 40 00:01:49,240 --> 00:01:52,520 Speaker 4: at panic territory, and it's been pretty good at signaling 41 00:01:52,600 --> 00:01:56,360 Speaker 4: some near term wiggles in the equity market panic to manic, 42 00:01:56,400 --> 00:01:58,400 Speaker 4: panic to manic. It was really the story of twenty 43 00:01:58,440 --> 00:02:00,480 Speaker 4: twenty three. We hit another panic button by the end 44 00:02:00,520 --> 00:02:04,120 Speaker 4: of October. At that same time, in the month of October, 45 00:02:04,240 --> 00:02:06,160 Speaker 4: we started to see the bond market turnover, and I 46 00:02:06,160 --> 00:02:08,280 Speaker 4: think that was a really big catalyst for stocks. With 47 00:02:08,919 --> 00:02:11,640 Speaker 4: the surgeon yields that we experienced in the third quarter 48 00:02:11,720 --> 00:02:15,920 Speaker 4: being really painful for equities, The reversal that emerged in 49 00:02:16,040 --> 00:02:18,959 Speaker 4: the bond market by late October early November was pretty 50 00:02:18,960 --> 00:02:21,920 Speaker 4: profound as a driver of risk tolerance in the equity market, 51 00:02:22,400 --> 00:02:24,600 Speaker 4: and it was off to the races for all markets. 52 00:02:24,680 --> 00:02:27,760 Speaker 4: As we finally got comfortable with the idea that the 53 00:02:28,400 --> 00:02:31,560 Speaker 4: end is here for hawkish monetary policy, we're likely to 54 00:02:31,600 --> 00:02:34,480 Speaker 4: move to a much more dubbish stance throughout the course 55 00:02:34,520 --> 00:02:37,200 Speaker 4: of twenty twenty four, and that's what markets started a 56 00:02:37,240 --> 00:02:38,560 Speaker 4: price in the fourth quarter. 57 00:02:39,000 --> 00:02:41,080 Speaker 3: You know, Gina. It was another one of those years 58 00:02:41,120 --> 00:02:44,120 Speaker 3: where it was the huge megacap growth stocks, you know, 59 00:02:44,160 --> 00:02:46,880 Speaker 3: the Magnificent seven or whatever you want to call them, 60 00:02:46,919 --> 00:02:49,639 Speaker 3: really driving the bus. And I feel like it's been 61 00:02:49,680 --> 00:02:53,400 Speaker 3: frustrating for sort of old school value investors to watch 62 00:02:53,440 --> 00:02:55,920 Speaker 3: this happen year after year, there always seems like there's 63 00:02:56,400 --> 00:02:58,760 Speaker 3: you know, a dawn coming for value and value is 64 00:02:58,800 --> 00:03:02,639 Speaker 3: going to start performing. Is this the year for that? 65 00:03:02,680 --> 00:03:03,120 Speaker 2: Do you think? 66 00:03:03,480 --> 00:03:05,760 Speaker 4: You know, I think that value actually really started to 67 00:03:05,760 --> 00:03:08,239 Speaker 4: get its legs all the way back in twenty twenty two. 68 00:03:08,600 --> 00:03:10,560 Speaker 4: And it's a bit of a misnomber that value as 69 00:03:10,600 --> 00:03:12,959 Speaker 4: a terrible performer last year. It really was about market 70 00:03:13,000 --> 00:03:15,840 Speaker 4: cap more than anything. When you market capajust the value factor, 71 00:03:15,880 --> 00:03:17,960 Speaker 4: it was a pretty flat year. It wasn't a great year, 72 00:03:18,480 --> 00:03:20,480 Speaker 4: but it wasn't a horrible year as you would assume 73 00:03:20,560 --> 00:03:23,440 Speaker 4: when you don't market capajus the value factor. So I 74 00:03:23,440 --> 00:03:27,040 Speaker 4: think that's something to consider. Also, really from the October 75 00:03:27,080 --> 00:03:29,080 Speaker 4: low small caps have been on a rip as well, 76 00:03:29,160 --> 00:03:32,240 Speaker 4: So you like to see small caps performing a little 77 00:03:32,240 --> 00:03:36,400 Speaker 4: while value not necessarily because large caps have been performing also, 78 00:03:37,000 --> 00:03:41,160 Speaker 4: but certainly, lower volatility stocks have underperformed high vall stocks, 79 00:03:41,280 --> 00:03:44,560 Speaker 4: high leverage stocks have outperformed low leverage stocks, so we 80 00:03:44,600 --> 00:03:47,360 Speaker 4: are seeing risk tolerance re emerge. Will it be a 81 00:03:47,440 --> 00:03:49,800 Speaker 4: year for value is a really tough call right now. 82 00:03:49,800 --> 00:03:51,720 Speaker 4: I mean, I think when you look at the composition 83 00:03:51,960 --> 00:03:54,880 Speaker 4: of you know, the value indices versus the growth indices, 84 00:03:55,360 --> 00:03:58,040 Speaker 4: the growth industries still have the favor of earnings trends, 85 00:03:59,120 --> 00:04:02,440 Speaker 4: and with policy sort of the policy impediment going away, 86 00:04:02,480 --> 00:04:04,320 Speaker 4: it's really tough to make a call for value to 87 00:04:04,320 --> 00:04:07,800 Speaker 4: be the big outperformer. With the one exception of maybe financials. 88 00:04:08,000 --> 00:04:11,080 Speaker 4: Inside the value index, you do have a pretty strong 89 00:04:11,160 --> 00:04:15,600 Speaker 4: representation from the financials segment. And if the yield curve 90 00:04:15,640 --> 00:04:19,320 Speaker 4: steeps continues to become more upward sloping, that could benefit 91 00:04:19,360 --> 00:04:22,120 Speaker 4: financials materially. I don't know how much investors are going 92 00:04:22,120 --> 00:04:24,400 Speaker 4: to embrace that trade, because everyone's still quite scared of 93 00:04:24,400 --> 00:04:27,279 Speaker 4: what's on the books of the banks. But nonetheless there 94 00:04:27,320 --> 00:04:29,760 Speaker 4: is an opportunity there, and if you can get some 95 00:04:29,800 --> 00:04:33,520 Speaker 4: stabilization in the commodities complex, that could enable the value 96 00:04:33,560 --> 00:04:34,279 Speaker 4: trade as well. 97 00:04:34,760 --> 00:04:36,440 Speaker 2: Git, I want to talk about earnings. I'm looking just 98 00:04:36,480 --> 00:04:38,080 Speaker 2: at the S and P five hundred and on the 99 00:04:38,120 --> 00:04:41,440 Speaker 2: Bloomberg terminal, looks like there's twelve percent kindish type of 100 00:04:41,520 --> 00:04:44,640 Speaker 2: earnings growth forecast for twenty twenty four. How do you 101 00:04:44,680 --> 00:04:48,839 Speaker 2: feel about that number? Should I considered some earnings risks 102 00:04:48,880 --> 00:04:49,720 Speaker 2: still out there in market? 103 00:04:50,200 --> 00:04:52,240 Speaker 4: You know, I think what's happening with earnings is really 104 00:04:52,240 --> 00:04:55,320 Speaker 4: interesting because if you were purely relying on macro factors 105 00:04:55,320 --> 00:04:57,600 Speaker 4: to forecast earnings, you would have gotten the last year wrong, 106 00:04:57,720 --> 00:05:01,760 Speaker 4: completely wrong. It really isn't a macro driven earnings trends. 107 00:05:01,800 --> 00:05:04,159 Speaker 4: And I think that this sort of dichotomy between what 108 00:05:04,200 --> 00:05:06,279 Speaker 4: we talk about all the time, which is the sluggish 109 00:05:06,320 --> 00:05:09,800 Speaker 4: macro economy, and what's happening in the earnings environment creates 110 00:05:09,839 --> 00:05:12,559 Speaker 4: a ton of confusion. But what's really driving earnings growth 111 00:05:12,600 --> 00:05:15,640 Speaker 4: right now is margin improvement. It has very little to 112 00:05:15,680 --> 00:05:17,560 Speaker 4: do with top line growth. It has very little to 113 00:05:17,800 --> 00:05:19,920 Speaker 4: do with some of the broad economic indicators that we're 114 00:05:19,960 --> 00:05:23,040 Speaker 4: following with the one exception of inflation, and inflation has 115 00:05:23,040 --> 00:05:26,919 Speaker 4: been incredibly consequential to determining the earnings outlook over the 116 00:05:26,920 --> 00:05:30,559 Speaker 4: course of the last two years. Inflation's acceleration in twenty 117 00:05:30,600 --> 00:05:34,560 Speaker 4: twenty two contributed to massive downdraft in earnings expectations and 118 00:05:34,600 --> 00:05:38,240 Speaker 4: earnings growth. Inflation's deceleration in twenty twenty three became a 119 00:05:38,240 --> 00:05:41,760 Speaker 4: big tailwind. As long as inflation continues to decelerate, as 120 00:05:41,800 --> 00:05:44,640 Speaker 4: long as PPI in particular decelerates faster than CPI, you 121 00:05:44,640 --> 00:05:47,800 Speaker 4: can count on margin improvement to continue to drive some 122 00:05:47,880 --> 00:05:50,719 Speaker 4: degree of s and p five hundred improvement irrespective of 123 00:05:50,760 --> 00:05:53,720 Speaker 4: what's going on in the broader macro and broader volume 124 00:05:53,800 --> 00:05:54,640 Speaker 4: sales environment. 125 00:05:55,120 --> 00:05:59,599 Speaker 3: Yo Gena. Paul was talking earlier about how many rate 126 00:05:59,720 --> 00:06:02,559 Speaker 3: cuts are actually priced y to the short term interest 127 00:06:02,640 --> 00:06:05,120 Speaker 3: rate market. No one seems to really believe we'll get 128 00:06:05,160 --> 00:06:09,560 Speaker 3: six rate cuts as the current pricing suggests. What does 129 00:06:09,600 --> 00:06:12,160 Speaker 3: that mean for the equity market? If there is, you 130 00:06:12,800 --> 00:06:16,200 Speaker 3: start to get some disappointment from the Fed speakers to 131 00:06:16,360 --> 00:06:17,640 Speaker 3: not expect that much easy. 132 00:06:17,960 --> 00:06:19,760 Speaker 4: Yeah, this goes back to something we were talking about 133 00:06:19,760 --> 00:06:21,760 Speaker 4: a little bit earlier, and that is is the yield 134 00:06:21,760 --> 00:06:24,599 Speaker 4: curve going to continue to upwardly steep in? Because that's 135 00:06:24,640 --> 00:06:27,320 Speaker 4: where you see the risk emanate or sort of work 136 00:06:27,360 --> 00:06:29,320 Speaker 4: it work its way into the equity market. Is if 137 00:06:29,360 --> 00:06:32,679 Speaker 4: the yield curve doesn't behave as anticipated, then you start 138 00:06:32,720 --> 00:06:36,440 Speaker 4: to see much more equity market sort of weakness potentially emerge. 139 00:06:36,920 --> 00:06:40,240 Speaker 4: So the question becomes how much of that rate cut 140 00:06:40,760 --> 00:06:43,080 Speaker 4: is priced into the short end versus the long end? 141 00:06:43,120 --> 00:06:45,440 Speaker 4: What's the term premium we're looking at today, which is 142 00:06:45,440 --> 00:06:47,880 Speaker 4: a whole other set of questions that we need to answer. 143 00:06:48,320 --> 00:06:50,479 Speaker 4: I would say it is a risk going into this year, 144 00:06:50,520 --> 00:06:54,760 Speaker 4: but it's nothing like the risk of oh my gosh, 145 00:06:54,839 --> 00:06:58,320 Speaker 4: the FED has to tighten five times, which we faced 146 00:06:58,320 --> 00:07:00,560 Speaker 4: at the beginning of twenty twenty two. And I think 147 00:07:00,600 --> 00:07:04,159 Speaker 4: that's a really significant point to be made. Is the 148 00:07:04,240 --> 00:07:06,480 Speaker 4: risk of the FED not quite doing as much as 149 00:07:06,520 --> 00:07:09,800 Speaker 4: we hoped is very different than the risk of the 150 00:07:09,840 --> 00:07:13,000 Speaker 4: FED really pushing the brakes on the economy, which is 151 00:07:13,040 --> 00:07:15,920 Speaker 4: a very different environment. So I think in nuance it 152 00:07:16,000 --> 00:07:17,600 Speaker 4: means that we could have a lot of wiggles. It 153 00:07:17,640 --> 00:07:20,200 Speaker 4: could be a choppier market than many are anticipating. It 154 00:07:20,280 --> 00:07:22,440 Speaker 4: certainly is not a market that looks exactly like the 155 00:07:22,480 --> 00:07:26,360 Speaker 4: fourth quarter of twenty twenty three, which was almost idyllic. Yeah, 156 00:07:27,520 --> 00:07:29,880 Speaker 4: we're not going to have the perfect environment to merge. 157 00:07:29,880 --> 00:07:34,320 Speaker 4: It's probably a much choppier environment through the next four 158 00:07:34,400 --> 00:07:36,600 Speaker 4: quarters or so, as we contend with a FED that 159 00:07:36,680 --> 00:07:39,520 Speaker 4: is going to be on again, off again and really 160 00:07:39,600 --> 00:07:42,520 Speaker 4: much more data dependant, perhaps than the market is anticipating. 161 00:07:43,200 --> 00:07:45,600 Speaker 2: Get a little technical here, breath in the market. It 162 00:07:45,640 --> 00:07:48,200 Speaker 2: was terrible, arguably for the first nine months of twenty 163 00:07:48,280 --> 00:07:51,040 Speaker 2: twenty three, the Magnificent seven. It seemed to get better 164 00:07:51,120 --> 00:07:54,160 Speaker 2: there during that year. In rally, we had to you 165 00:07:54,200 --> 00:07:57,200 Speaker 2: know the russell, you know out or form we had 166 00:07:57,200 --> 00:07:58,720 Speaker 2: the even if you look at the S and P 167 00:07:59,000 --> 00:08:03,200 Speaker 2: equal weighted, that outer perform the SPX. So it looks 168 00:08:03,240 --> 00:08:05,280 Speaker 2: like the breath kind of got better in that fourth quarter. 169 00:08:05,360 --> 00:08:06,800 Speaker 2: Is it where we want to see it today? 170 00:08:07,160 --> 00:08:09,160 Speaker 4: It's a lot better. It might actually be a little 171 00:08:09,160 --> 00:08:11,880 Speaker 4: overbought at this point in time, and so I hate 172 00:08:11,920 --> 00:08:14,320 Speaker 4: to be the bearer of bad news or anything. But 173 00:08:14,360 --> 00:08:15,960 Speaker 4: when you get to a point where more than seventy 174 00:08:15,960 --> 00:08:17,960 Speaker 4: five percent of sticks they're trading above their fifty day 175 00:08:17,960 --> 00:08:21,040 Speaker 4: moving average, where RSIs are surging above eighty, which is 176 00:08:21,040 --> 00:08:24,080 Speaker 4: where we were by the end of December, it usually 177 00:08:24,240 --> 00:08:26,800 Speaker 4: is a point that triggers some degree of consolidation in 178 00:08:26,800 --> 00:08:28,920 Speaker 4: the equity market. We're already seeing that at the start 179 00:08:28,960 --> 00:08:32,480 Speaker 4: of this year. So we got a bit overbought on breath. 180 00:08:32,480 --> 00:08:34,280 Speaker 4: I don't want to put too much cold water on it, 181 00:08:34,320 --> 00:08:37,120 Speaker 4: because of course, we want more participation to ultimately fuel 182 00:08:37,160 --> 00:08:40,760 Speaker 4: the market's gains, and seeing more participation across the world 183 00:08:40,840 --> 00:08:42,920 Speaker 4: as well as into lower caps is a very good 184 00:08:42,960 --> 00:08:47,320 Speaker 4: thing for the equity market's longer term trend durability. But 185 00:08:47,400 --> 00:08:49,880 Speaker 4: in the short run it probably does indicate that we're 186 00:08:49,920 --> 00:08:52,120 Speaker 4: a little too overbought, and we're due for some consolidation. 187 00:08:52,720 --> 00:08:54,800 Speaker 3: You know, Gene, It's a time of year where a 188 00:08:54,800 --> 00:08:58,920 Speaker 3: lot of the old seasonality tropes get trotted out dependably 189 00:08:59,040 --> 00:09:02,439 Speaker 3: and reliably, you know, as goes January, as goes rest 190 00:09:02,480 --> 00:09:03,959 Speaker 3: of the year. Some people just look at the first 191 00:09:04,000 --> 00:09:06,800 Speaker 3: week and believe that that's a sign of where we're 192 00:09:06,800 --> 00:09:08,559 Speaker 3: going for the year. Are you a buyer of any 193 00:09:08,600 --> 00:09:08,800 Speaker 3: of that? 194 00:09:09,640 --> 00:09:12,319 Speaker 4: Ah, not hugely. I mean, of course, if you have 195 00:09:12,360 --> 00:09:14,480 Speaker 4: a great January, you've got one month under your belt, 196 00:09:14,480 --> 00:09:16,200 Speaker 4: and so it means that one month out of twelve 197 00:09:16,240 --> 00:09:18,440 Speaker 4: is positive, and so the math works in your favor 198 00:09:19,080 --> 00:09:21,120 Speaker 4: a little bit. So if we do have a pretty 199 00:09:21,120 --> 00:09:24,760 Speaker 4: positive January, generally that indicates that your year as more 200 00:09:24,920 --> 00:09:28,440 Speaker 4: likely to be positive. Yeah. I think we have to 201 00:09:28,480 --> 00:09:32,280 Speaker 4: be a little bit more conscientious about short term changes 202 00:09:32,320 --> 00:09:34,720 Speaker 4: and shifts in the broader macro as well as in 203 00:09:34,760 --> 00:09:37,640 Speaker 4: the earnings landscape, and those tend to dominate a lot 204 00:09:37,679 --> 00:09:40,800 Speaker 4: more in my thought process. I do think that after 205 00:09:40,840 --> 00:09:42,560 Speaker 4: the incredible search we had in the fourth quarter, we're 206 00:09:42,600 --> 00:09:46,440 Speaker 4: due for consolidation. But broadly, all of the trends are 207 00:09:46,480 --> 00:09:48,960 Speaker 4: still very supportive of stocks and really have been since 208 00:09:49,040 --> 00:09:52,360 Speaker 4: late twenty twenty two. It won't be a perfect climb higher, 209 00:09:52,400 --> 00:09:55,840 Speaker 4: but it is worth noting that participation is great. We 210 00:09:55,880 --> 00:09:58,920 Speaker 4: want to see this some improvement and momentum is a 211 00:09:58,920 --> 00:10:02,079 Speaker 4: positive thing, and none of these things are things that 212 00:10:02,120 --> 00:10:03,520 Speaker 4: we want to fade over the long run. 213 00:10:04,440 --> 00:10:06,400 Speaker 2: What's the status of University of Florida football? 214 00:10:06,640 --> 00:10:06,800 Speaker 5: Oh? 215 00:10:06,840 --> 00:10:09,160 Speaker 2: God, do we have to go there? 216 00:10:09,360 --> 00:10:11,240 Speaker 4: I mean, you know, secretly, I was really excited to 217 00:10:11,280 --> 00:10:14,920 Speaker 4: see Michigan beat Alabama. Right, this is the depths of 218 00:10:14,960 --> 00:10:17,640 Speaker 4: my despairs and now looking at other teams because my 219 00:10:17,679 --> 00:10:20,320 Speaker 4: team is no longer in the run. It's been a 220 00:10:20,400 --> 00:10:22,680 Speaker 4: rough couple of years. 221 00:10:23,840 --> 00:10:24,200 Speaker 1: I don't know. 222 00:10:24,200 --> 00:10:26,080 Speaker 4: I would like to say yes, but it's not looking. 223 00:10:26,400 --> 00:10:28,360 Speaker 3: We're optimistic about the market than the Gators. 224 00:10:28,400 --> 00:10:29,559 Speaker 4: It sounds yeah. 225 00:10:30,120 --> 00:10:34,719 Speaker 2: With Gina Martin Adams, chief equity strategist for Bloomberg Intelligence 226 00:10:34,720 --> 00:10:38,040 Speaker 2: and a proud graduate of the University of Florida. 227 00:10:40,080 --> 00:10:43,440 Speaker 6: You're listening to the Team Ken's Are Live program Bloomberg 228 00:10:43,559 --> 00:10:46,920 Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot Com, 229 00:10:47,000 --> 00:10:50,120 Speaker 6: the iHeartRadio app, and the Bloomberg Business App, or listen 230 00:10:50,200 --> 00:10:52,239 Speaker 6: on demand wherever you get your podcast. 231 00:10:54,400 --> 00:10:58,199 Speaker 2: We got some delivery data just recently for some of 232 00:10:58,200 --> 00:11:02,760 Speaker 2: the electric vehicle companies, some kind of Tesla Rivian all 233 00:11:02,760 --> 00:11:04,319 Speaker 2: that type of stuff. Let's get the latest here from 234 00:11:04,320 --> 00:11:08,120 Speaker 2: Steve Man. He's a global auto market research leader for 235 00:11:08,240 --> 00:11:12,679 Speaker 2: Bloomberg Intelligence. He's zooming in from our Princeton campus down 236 00:11:12,720 --> 00:11:15,480 Speaker 2: there in Princeton, New Jersey. Steve, let's start with Tesla here. 237 00:11:15,520 --> 00:11:19,400 Speaker 2: The numbers kind of in line with expectation, but I 238 00:11:19,440 --> 00:11:23,280 Speaker 2: know the news headline is Tesla falls behind BYD and 239 00:11:23,360 --> 00:11:26,839 Speaker 2: quarterly EV sales. You spent many years in Hong Kong 240 00:11:26,920 --> 00:11:29,800 Speaker 2: leading our Bloomberg Intelligence effort there, so you had first 241 00:11:29,840 --> 00:11:33,040 Speaker 2: hand look at the growth and development of the Chinese 242 00:11:33,720 --> 00:11:36,679 Speaker 2: electric vehicle market. Tell us what's happening with Well, first 243 00:11:36,679 --> 00:11:39,040 Speaker 2: of all, like who is by D and how do 244 00:11:39,080 --> 00:11:40,200 Speaker 2: they compete against Tesla? 245 00:11:41,040 --> 00:11:46,520 Speaker 5: Well, yeah, that's right, Paul. By D fourth quarter EV 246 00:11:46,679 --> 00:11:50,840 Speaker 5: sales came in about eight percent, about above Tesla's on 247 00:11:50,880 --> 00:11:54,280 Speaker 5: a global level. So it's pretty significant first time ever 248 00:11:54,720 --> 00:11:58,520 Speaker 5: that the Boi D bet Tesla. Well, by D is 249 00:11:58,880 --> 00:12:04,760 Speaker 5: Warren Buffett back electric vehicle manufacturer. You know, they've they're 250 00:12:04,880 --> 00:12:10,160 Speaker 5: very vertically integrated. They've launched a slew of cheaper, less 251 00:12:10,200 --> 00:12:14,360 Speaker 5: expensive models in the China market. So that's you know, 252 00:12:14,520 --> 00:12:17,440 Speaker 5: probably driven a lot of the sales in the fourth 253 00:12:17,520 --> 00:12:21,960 Speaker 5: quarter on the back of you know, weaker macro macroeconomic conditions. 254 00:12:22,040 --> 00:12:25,040 Speaker 5: So they've done well. BYD has done well, and. 255 00:12:25,040 --> 00:12:28,880 Speaker 3: Yet Steve, we don't see any by D vehicles in 256 00:12:29,000 --> 00:12:30,640 Speaker 3: the US. Correct me if I'm wrong about that, at 257 00:12:30,679 --> 00:12:33,560 Speaker 3: least passenger vehicles. I wonder why that is. Is it 258 00:12:33,720 --> 00:12:36,760 Speaker 3: tariffs or trade war issues? Is it just a business 259 00:12:36,840 --> 00:12:37,720 Speaker 3: decision on their part. 260 00:12:38,200 --> 00:12:42,839 Speaker 5: Oh, it's a combination of all that. I think. More importantly, uh, 261 00:12:43,000 --> 00:12:47,360 Speaker 5: BYD just doesn't have, you know, the distribution network like 262 00:12:47,520 --> 00:12:49,960 Speaker 5: the Big Three and some of the European companies have 263 00:12:50,400 --> 00:12:52,439 Speaker 5: here in the US, so it's really hard for them 264 00:12:52,480 --> 00:12:56,480 Speaker 5: to establish themselves to really build the brand in the US. 265 00:12:57,120 --> 00:12:59,960 Speaker 5: So on top of all the stuff you just talked about, 266 00:13:00,640 --> 00:13:02,880 Speaker 5: they you know, their their focus is really not in 267 00:13:02,880 --> 00:13:06,800 Speaker 5: the US, though they are getting into Europe. They're planning 268 00:13:06,840 --> 00:13:09,680 Speaker 5: to build a plant in Hungary in twenty twenty six. 269 00:13:09,720 --> 00:13:13,640 Speaker 5: It's a low cost producing manufacturing country, so they want 270 00:13:13,720 --> 00:13:17,280 Speaker 5: to kind of break into the European market first then 271 00:13:17,559 --> 00:13:21,439 Speaker 5: think about the US. So you know this this, you 272 00:13:21,480 --> 00:13:24,160 Speaker 5: know we were talking about the the EV sales crown. 273 00:13:24,240 --> 00:13:27,040 Speaker 5: I think it's going to be flip flopping between Tesla 274 00:13:27,360 --> 00:13:29,880 Speaker 5: and and buy D in the next year, maybe into 275 00:13:29,920 --> 00:13:33,760 Speaker 5: twenty twenty five, until you know, BID has a plant 276 00:13:34,040 --> 00:13:37,200 Speaker 5: in Europe. You know, that's the you know, that's when 277 00:13:37,200 --> 00:13:40,600 Speaker 5: they you know, move out of their local comfort zone, 278 00:13:40,679 --> 00:13:44,480 Speaker 5: local market in China and expand overseas. And you know, 279 00:13:44,600 --> 00:13:47,520 Speaker 5: that's probably when they're gonna if if you know, I 280 00:13:47,600 --> 00:13:50,240 Speaker 5: do Bid continue to do well, that's probably when they're 281 00:13:50,240 --> 00:13:55,319 Speaker 5: going to solidify the lead for global EV sales. 282 00:13:55,640 --> 00:13:57,880 Speaker 2: You know. Interesting, I'm looking at an interesting article on 283 00:13:57,920 --> 00:14:01,520 Speaker 2: the Bloomberg terminal today from Bloomberg newsctric car models eligible 284 00:14:01,559 --> 00:14:04,640 Speaker 2: for seventy five hundred dollars tax credit cut to thirteen 285 00:14:05,000 --> 00:14:08,240 Speaker 2: from almost two dozen. The new list excludes vehicles that 286 00:14:08,360 --> 00:14:11,960 Speaker 2: use certain Chinese made parts that can't be good for 287 00:14:12,280 --> 00:14:13,800 Speaker 2: EV sales in the United States. 288 00:14:14,720 --> 00:14:19,160 Speaker 5: No, it's it's interesting because the Inflation Reduction Act was 289 00:14:19,280 --> 00:14:24,840 Speaker 5: supposed to generate or supposed to increase EV sales in 290 00:14:24,880 --> 00:14:27,480 Speaker 5: the US. But it's kind of counterintuitive. But I think 291 00:14:27,520 --> 00:14:31,480 Speaker 5: that's only temporary because what the IRA really is trying 292 00:14:31,520 --> 00:14:36,240 Speaker 5: to do is get us to build a supply chain, 293 00:14:36,320 --> 00:14:39,880 Speaker 5: battery supply chain locally here in the US, so that 294 00:14:40,800 --> 00:14:45,640 Speaker 5: battery prices come down. EV's becomes more affordable for the 295 00:14:45,720 --> 00:14:48,920 Speaker 5: US consumer. So if you look out, if you look 296 00:14:48,960 --> 00:14:51,880 Speaker 5: at all the investments that's been made so far on 297 00:14:52,000 --> 00:14:55,080 Speaker 5: battery plants, a lot of those will actually come online 298 00:14:55,440 --> 00:14:58,320 Speaker 5: in twenty twenty five, twenty twenty six. That's gonna make 299 00:14:58,400 --> 00:15:03,960 Speaker 5: US battery production lot more competitive and probably able to 300 00:15:03,960 --> 00:15:08,760 Speaker 5: produce batteries below what the Chinese are producing at. So 301 00:15:09,480 --> 00:15:12,520 Speaker 5: we think that's right. We think ev sales will probably 302 00:15:12,720 --> 00:15:15,440 Speaker 5: take a break in the next couple of years until 303 00:15:15,720 --> 00:15:19,640 Speaker 5: more models come in plays with play with cheaper batteries, 304 00:15:20,160 --> 00:15:25,960 Speaker 5: and hopefully, hopefully the mindset of the US consumer changes 305 00:15:26,000 --> 00:15:29,560 Speaker 5: a bit and they get they become more warmed up 306 00:15:29,640 --> 00:15:33,520 Speaker 5: to EV's, and hopefully demand will improve twenty twenty five 307 00:15:33,560 --> 00:15:34,000 Speaker 5: and beyond. 308 00:15:34,520 --> 00:15:38,320 Speaker 3: You know, Steve, I rode over the weekend in Rivian 309 00:15:38,400 --> 00:15:41,760 Speaker 3: for the first time. My buddy finally got delivery over Rivian. 310 00:15:41,920 --> 00:15:43,720 Speaker 3: I don't know what you would I think it was 311 00:15:43,800 --> 00:15:45,520 Speaker 3: like five years ago. I got to say, it's an 312 00:15:45,520 --> 00:15:47,920 Speaker 3: impressive car. I mean, I'm know Matt Miller as far 313 00:15:47,960 --> 00:15:51,000 Speaker 3: as reviewing automobiles. But I was impressed. But then I 314 00:15:51,000 --> 00:15:54,160 Speaker 3: read today Steve that Rivian stock is really taking a 315 00:15:54,200 --> 00:15:58,840 Speaker 3: beating today because their deliveries in the fourth quarter missed estimates. Now, 316 00:15:58,880 --> 00:16:01,640 Speaker 3: I know it's a very spensive vehicle. I wonder if 317 00:16:01,720 --> 00:16:04,880 Speaker 3: that's part of the problem or is it execution? Is 318 00:16:04,880 --> 00:16:08,320 Speaker 3: it still supply chain issues? What's going on with Rivian 319 00:16:08,360 --> 00:16:09,800 Speaker 3: that they're missing estimates? 320 00:16:10,080 --> 00:16:14,760 Speaker 5: Yeah, I think it's down ten percent today, and it's 321 00:16:14,840 --> 00:16:17,840 Speaker 5: it's more of an operational issue. I think. You know, 322 00:16:18,040 --> 00:16:20,479 Speaker 5: a few weeks ago, you know, there was an announcement 323 00:16:21,080 --> 00:16:25,000 Speaker 5: that AT and T was going to buy the Rivian trucks, 324 00:16:25,040 --> 00:16:27,040 Speaker 5: and you know, I think everybody got excited to stop 325 00:16:28,000 --> 00:16:32,360 Speaker 5: search quite a bit. I think that's because people thought, 326 00:16:32,760 --> 00:16:35,440 Speaker 5: you know, the break even is actually sooner than later. 327 00:16:36,520 --> 00:16:39,800 Speaker 5: Right now, Rivian actually uses on every card that they 328 00:16:39,840 --> 00:16:43,920 Speaker 5: that they built. Uh So, now that you know they're 329 00:16:44,320 --> 00:16:47,080 Speaker 5: you know, the they kind of they really didn't really 330 00:16:47,080 --> 00:16:50,720 Speaker 5: miss They kind of kind of hit consensus expectation. But 331 00:16:50,760 --> 00:16:53,680 Speaker 5: I think consensus the street was expecting a lot higher 332 00:16:53,760 --> 00:16:58,760 Speaker 5: number a beat. So the you know, the thinking is 333 00:16:59,120 --> 00:17:03,280 Speaker 5: maybe the breaking even point is not gonna be twenty 334 00:17:03,320 --> 00:17:06,000 Speaker 5: twenty four, twenty twenty five, probably in twenty twenty six. 335 00:17:06,080 --> 00:17:08,800 Speaker 5: So the concern is, you know, how are they gonna 336 00:17:09,320 --> 00:17:11,120 Speaker 5: make it through between now and then? 337 00:17:11,400 --> 00:17:13,639 Speaker 3: Yeah, these are one hundred thousand dollars cars too, right, 338 00:17:13,880 --> 00:17:15,200 Speaker 3: there's no room to cut prices. 339 00:17:15,200 --> 00:17:15,680 Speaker 6: AA true. 340 00:17:15,840 --> 00:17:18,960 Speaker 2: I mean Matt Matt Miller was able to arrange a 341 00:17:19,000 --> 00:17:21,840 Speaker 2: week long test for me of the F one fifty Lightning, 342 00:17:22,119 --> 00:17:24,840 Speaker 2: which was an awesome vehicle. And I'm not an EV person, 343 00:17:24,880 --> 00:17:26,919 Speaker 2: I'm not certainly not a truck person. I'm a Wall 344 00:17:26,960 --> 00:17:27,400 Speaker 2: Street person. 345 00:17:27,520 --> 00:17:29,040 Speaker 3: Biller's just farming out vehicles. 346 00:17:29,240 --> 00:17:33,159 Speaker 2: Yeah, but the sticker on this thing was ninety four grand. Yeah. 347 00:17:33,400 --> 00:17:33,480 Speaker 5: Jo. 348 00:17:33,640 --> 00:17:36,800 Speaker 2: Wow, that's just a serious thing. So all right, Steve More, 349 00:17:36,840 --> 00:17:40,800 Speaker 2: Tesla News, their their deliveries. We're pretty much in line 350 00:17:40,800 --> 00:17:43,560 Speaker 2: with estimates. Is that Is that a good performance for 351 00:17:44,000 --> 00:17:44,680 Speaker 2: Tesla here? 352 00:17:45,640 --> 00:17:49,119 Speaker 5: Well, they did revise their guidance and adviser guidance. 353 00:17:49,240 --> 00:17:49,480 Speaker 6: Yes. 354 00:17:49,600 --> 00:17:51,840 Speaker 5: I think Elon Musk at the beginning of twenty twenty 355 00:17:51,840 --> 00:17:55,840 Speaker 5: three was talking about two million, two million unit number. 356 00:17:56,880 --> 00:17:59,080 Speaker 5: You know, they had a bunch of price cuts, the 357 00:17:59,200 --> 00:18:02,439 Speaker 5: drum at the man drum up demand and you know 358 00:18:02,560 --> 00:18:05,840 Speaker 5: they ended up at one point eight. Uh, it's probably 359 00:18:05,880 --> 00:18:08,320 Speaker 5: gonna be a slower growth, like I said earlier, in 360 00:18:08,320 --> 00:18:10,800 Speaker 5: the next couple of years. We think, you know, Tesla 361 00:18:10,880 --> 00:18:12,800 Speaker 5: maybe can able to do two point one, you know, 362 00:18:12,880 --> 00:18:16,840 Speaker 5: especially with uh, you know the price cuts that the 363 00:18:16,960 --> 00:18:19,360 Speaker 5: series of price cuts that they made in twenty twenty three, 364 00:18:19,480 --> 00:18:23,520 Speaker 5: and maybe cyber truck coming online hopefully you know, Uh, 365 00:18:23,560 --> 00:18:26,159 Speaker 5: they can get that going quickly, get that you know, 366 00:18:26,240 --> 00:18:30,160 Speaker 5: new battery plant going quickly and hit that two point one. 367 00:18:30,240 --> 00:18:33,399 Speaker 5: But there is a risk in terms of earnings. Uh, 368 00:18:33,480 --> 00:18:36,879 Speaker 5: it's it's a it's a it's a tall order for Tesla. 369 00:18:36,920 --> 00:18:37,880 Speaker 5: It's a balancing act. 370 00:18:37,880 --> 00:18:38,040 Speaker 2: You know. 371 00:18:38,080 --> 00:18:40,960 Speaker 5: They want to continue to pump the Model three and 372 00:18:41,119 --> 00:18:44,400 Speaker 5: Model wiout get sales up because that's a cash cow 373 00:18:44,560 --> 00:18:47,040 Speaker 5: for them. But at the same time they're going to 374 00:18:47,119 --> 00:18:51,080 Speaker 5: manage ramping up cyber truck and and the next model 375 00:18:51,119 --> 00:18:53,560 Speaker 5: that they want to introduce, which is a compact you know, 376 00:18:53,640 --> 00:18:57,840 Speaker 5: it's dubbed the Model to the compact vehicle. So you know, 377 00:18:57,920 --> 00:19:00,280 Speaker 5: there's a lot of there's a lot of things they 378 00:19:00,359 --> 00:19:03,480 Speaker 5: got to mention twenty twenty four, and you know, I 379 00:19:03,520 --> 00:19:07,320 Speaker 5: think there is there is a risk to to kensensus earnings. 380 00:19:07,760 --> 00:19:09,520 Speaker 2: All right, Steve Mann, thanks so much. For joining us. 381 00:19:09,520 --> 00:19:12,159 Speaker 2: Steve Man. He's a global auto market research leader for 382 00:19:12,400 --> 00:19:17,800 Speaker 2: Bloomberg Intelligence based now in Princeton, New Jersey, after you 383 00:19:17,800 --> 00:19:22,200 Speaker 2: know managing Bloomberg Intelligence in Hong Kong for many years. 384 00:19:22,480 --> 00:19:26,080 Speaker 6: You're listening to the tape cancer Live program Bloomberg Markets 385 00:19:26,119 --> 00:19:29,520 Speaker 6: weekdays at ten am Eastern on Bloomberg Radio, the tune 386 00:19:29,560 --> 00:19:32,520 Speaker 6: in app, Bloomberg dot Com, and the Bloomberg Business App. 387 00:19:32,560 --> 00:19:35,320 Speaker 6: You can also listen live on Amazon Alexa from our 388 00:19:35,400 --> 00:19:40,400 Speaker 6: flagship New York station. Just say Alexa play Bloomberg eleven thirty. 389 00:19:41,960 --> 00:19:44,240 Speaker 2: Michael Reagan, Paul Sweeney. We're live here in our Bloomerg 390 00:19:44,280 --> 00:19:46,960 Speaker 2: inter Active Brokers studio. We're streaming live on YouTube. It's 391 00:19:46,960 --> 00:19:49,080 Speaker 2: ahead over there if you like YouTube dot com and 392 00:19:49,119 --> 00:19:50,560 Speaker 2: search Bloomberg or Radio. 393 00:19:50,960 --> 00:19:51,120 Speaker 3: Mike. 394 00:19:51,240 --> 00:19:53,840 Speaker 2: If you were a fund manager and you weren't all 395 00:19:53,880 --> 00:19:56,240 Speaker 2: in on the fourth quarter, there's no way you could 396 00:19:56,240 --> 00:19:57,000 Speaker 2: perform last year. 397 00:19:57,160 --> 00:19:59,280 Speaker 3: You have a hard time writing that letter to investors 398 00:19:59,520 --> 00:20:00,440 Speaker 3: at the end last year. 399 00:20:00,520 --> 00:20:02,639 Speaker 2: Exactly right. Let's check in with somebody who does do 400 00:20:02,680 --> 00:20:05,200 Speaker 2: this stuff for loving. Phil Taes. He's the CEO Tay's 401 00:20:05,240 --> 00:20:07,440 Speaker 2: Asset Management, and Phil, thanks for joining us here in 402 00:20:07,480 --> 00:20:07,959 Speaker 2: our studio. 403 00:20:08,000 --> 00:20:08,200 Speaker 3: Here. 404 00:20:08,800 --> 00:20:10,920 Speaker 2: I remember, I believe the last time we chatted with you, 405 00:20:10,920 --> 00:20:13,600 Speaker 2: you had over ninety percent of your assets in cash. 406 00:20:14,119 --> 00:20:17,560 Speaker 2: Hopefully you weren't that positioned in the fourth quarter. 407 00:20:17,640 --> 00:20:20,720 Speaker 7: And thankfully we were not. So we haven't run a 408 00:20:20,720 --> 00:20:23,760 Speaker 7: pretty tight trend following algorithm across our different assets. 409 00:20:23,800 --> 00:20:25,000 Speaker 2: Trend following algorithm. 410 00:20:25,040 --> 00:20:28,399 Speaker 7: Yes, yeah, that's some multi salabc stuff for you there. 411 00:20:28,640 --> 00:20:31,600 Speaker 7: But we came back into the markets early in the 412 00:20:31,600 --> 00:20:33,639 Speaker 7: fourth quarter and we're there for the rest of the year. 413 00:20:33,640 --> 00:20:36,480 Speaker 7: I mean, you remember that downturn we had last year. 414 00:20:36,600 --> 00:20:38,280 Speaker 7: It looked like it was going to turn into something. 415 00:20:38,280 --> 00:20:38,720 Speaker 2: It didn't. 416 00:20:38,800 --> 00:20:41,399 Speaker 7: And yeah, thankfully everyone had most people that they were 417 00:20:41,400 --> 00:20:42,800 Speaker 7: invested at least had a great fourth quarter. 418 00:20:43,119 --> 00:20:45,560 Speaker 3: Yeah, Phil, I was cracking up reading your notes to 419 00:20:45,640 --> 00:20:48,760 Speaker 3: us earlier today. You say the key insight for the 420 00:20:48,840 --> 00:20:52,480 Speaker 3: year is to adopt a George Costanza perspective exactly. 421 00:20:52,680 --> 00:20:52,800 Speaker 5: So. 422 00:20:52,880 --> 00:20:55,919 Speaker 7: I guess they're probably listeners that don't know who George is. 423 00:20:56,000 --> 00:21:00,440 Speaker 7: But on Seinfeld, he made such ubiquitously bad decisions. He 424 00:21:00,520 --> 00:21:03,800 Speaker 7: decided the best way to lead his life was to 425 00:21:03,840 --> 00:21:06,040 Speaker 7: do the opposite of what his judgment told him, right, 426 00:21:06,160 --> 00:21:07,720 Speaker 7: And I think if you look back over the last 427 00:21:08,240 --> 00:21:12,920 Speaker 7: really four years now, you just see that markets were inexplicable, 428 00:21:13,040 --> 00:21:17,360 Speaker 7: Like in twenty twenty and twenty twenty one pre vaccine right, 429 00:21:17,520 --> 00:21:20,280 Speaker 7: markets were soaring after a downturn of course in twenty 430 00:21:20,320 --> 00:21:23,479 Speaker 7: twenty and really almost no one could have predicted that. 431 00:21:23,680 --> 00:21:26,560 Speaker 7: Then again, in twenty twenty two, we thought markets were 432 00:21:26,600 --> 00:21:30,240 Speaker 7: going to do okay, despite the fact that we thought 433 00:21:30,400 --> 00:21:32,960 Speaker 7: the inflation was gonna be transitory, yields wouldn't go higher. 434 00:21:33,040 --> 00:21:35,639 Speaker 7: Markets got hit very hard. And how many people were 435 00:21:35,680 --> 00:21:38,680 Speaker 7: predicting a really great market in twenty twenty three. 436 00:21:38,760 --> 00:21:39,200 Speaker 2: Not many. 437 00:21:39,240 --> 00:21:41,760 Speaker 7: And in fact, if you look at Forbes' collection of 438 00:21:41,880 --> 00:21:44,560 Speaker 7: Wall Street strategists, that was one of the first time 439 00:21:44,600 --> 00:21:46,640 Speaker 7: they were ever in times they were ever negative, thinking 440 00:21:46,680 --> 00:21:49,160 Speaker 7: they would have a five percent loss in twenty twenty three. 441 00:21:49,680 --> 00:21:52,080 Speaker 7: Of course, that obviously didn't happen. So let's just do 442 00:21:52,080 --> 00:21:53,800 Speaker 7: the opposite of what our best judgment tells us for 443 00:21:53,840 --> 00:21:54,520 Speaker 7: twenty twenty four. 444 00:21:55,359 --> 00:21:57,040 Speaker 2: What are your thoughts here as we start the new year? 445 00:21:57,119 --> 00:22:00,520 Speaker 7: Okay, So our approach is different than many. In other words, 446 00:22:00,640 --> 00:22:02,920 Speaker 7: we don't want to be firmly directional for the year. 447 00:22:02,960 --> 00:22:04,840 Speaker 7: We don't think that's wise for reasons I just talked 448 00:22:04,840 --> 00:22:07,440 Speaker 7: about it's almost impossible to predict the markets. So what 449 00:22:07,480 --> 00:22:10,160 Speaker 7: we embrace is an approach we call a behavioral portfolio. 450 00:22:10,440 --> 00:22:13,000 Speaker 7: It's in all seasons approach that does two things. It 451 00:22:13,040 --> 00:22:16,359 Speaker 7: attempts to allow you to be in core asset classes 452 00:22:16,440 --> 00:22:19,080 Speaker 7: like stocks and bonds, but do it in a way 453 00:22:19,119 --> 00:22:23,080 Speaker 7: that addresses contingencies. You know, in my notes I wrote, 454 00:22:23,119 --> 00:22:25,439 Speaker 7: I said gene Fama is a smart guy, but what 455 00:22:25,520 --> 00:22:27,920 Speaker 7: investors want is not the very best performance. They want 456 00:22:27,920 --> 00:22:30,120 Speaker 7: to be in the markets, but not get blown to pieces. 457 00:22:30,480 --> 00:22:33,360 Speaker 7: So for equities, take half your equities, put it into 458 00:22:33,400 --> 00:22:35,639 Speaker 7: hedge equities, so that if markets turned down, you're going 459 00:22:35,720 --> 00:22:39,800 Speaker 7: to have some potentially bolstering offsetting appreciation. And some things 460 00:22:40,040 --> 00:22:43,080 Speaker 7: for fixed income be adaptive, like have an unconstrained fund 461 00:22:43,119 --> 00:22:45,320 Speaker 7: that can be in different parts of the market, T bills, 462 00:22:45,520 --> 00:22:47,639 Speaker 7: high yould bonds, investment grade. 463 00:22:47,800 --> 00:22:50,119 Speaker 3: You know, when you look at some of the indexes 464 00:22:50,119 --> 00:22:52,840 Speaker 3: of trend following as a strategy, you know, I look 465 00:22:52,840 --> 00:22:56,480 Speaker 3: at the CTI ETFs as one example of menaged futures GTF, 466 00:22:57,000 --> 00:23:01,159 Speaker 3: the dB Cross Asset ct index. They had really great 467 00:23:01,320 --> 00:23:03,560 Speaker 3: twenty twenty twos when the when the stock market was 468 00:23:03,600 --> 00:23:07,200 Speaker 3: down and the bond market was down from these indexes. 469 00:23:07,240 --> 00:23:10,080 Speaker 3: Not such a good twenty twenty three when you would think, 470 00:23:10,160 --> 00:23:11,840 Speaker 3: you know, the equity markets seemed to just go in 471 00:23:11,880 --> 00:23:13,680 Speaker 3: one direction last year. 472 00:23:13,800 --> 00:23:14,600 Speaker 2: Is it? 473 00:23:14,440 --> 00:23:16,359 Speaker 3: Is there sort of a bias to being short and 474 00:23:16,440 --> 00:23:18,720 Speaker 3: trend following that you do You do better when you're 475 00:23:18,840 --> 00:23:20,720 Speaker 3: when you're on the short side when the market's going down. 476 00:23:20,800 --> 00:23:22,119 Speaker 7: Well, so I think you have to be careful what 477 00:23:22,160 --> 00:23:24,080 Speaker 7: you look at. So if you're looking at CTAs, often 478 00:23:24,119 --> 00:23:27,320 Speaker 7: they're investing in trend following in futures contracts that are 479 00:23:27,359 --> 00:23:30,080 Speaker 7: not necessarily stock market yeah, right, and so you want 480 00:23:30,080 --> 00:23:32,399 Speaker 7: to focus on something that's more of a pure hedge 481 00:23:32,440 --> 00:23:37,040 Speaker 7: equity play. But right, so often hedged equity strategies will 482 00:23:37,080 --> 00:23:39,600 Speaker 7: trail during a rise market. And I think that that's 483 00:23:39,600 --> 00:23:42,600 Speaker 7: why this combined approach of being hedge equities for half 484 00:23:42,640 --> 00:23:44,920 Speaker 7: of your equities just conventional stuff or the other half 485 00:23:44,920 --> 00:23:47,239 Speaker 7: of your equities on average, if you would have done that, 486 00:23:47,320 --> 00:23:49,919 Speaker 7: you still would have probably been up, you know, nicely 487 00:23:49,960 --> 00:23:52,960 Speaker 7: double digits, maybe a little over twenty percent, not all 488 00:23:53,000 --> 00:23:54,879 Speaker 7: the way with the market, but you would have been 489 00:23:54,920 --> 00:23:55,720 Speaker 7: there for the markets. 490 00:23:56,119 --> 00:23:58,280 Speaker 2: So how much cash do you have now or are 491 00:23:58,280 --> 00:23:59,920 Speaker 2: you essentially fully missed. 492 00:24:00,160 --> 00:24:01,560 Speaker 7: Zero cash, so. 493 00:24:01,200 --> 00:24:02,320 Speaker 3: We went when we went along. 494 00:24:02,520 --> 00:24:05,359 Speaker 7: Okay, now I say that with one caveat and some 495 00:24:05,359 --> 00:24:07,399 Speaker 7: of our unconstrained bond strategies, we do have some T 496 00:24:07,520 --> 00:24:11,840 Speaker 7: build exposure presently, but across all of our equity strategies 497 00:24:11,840 --> 00:24:12,919 Speaker 7: and everything else, we're fully out. 498 00:24:13,200 --> 00:24:15,920 Speaker 2: So in fixed income, I mean fixing gum actually had 499 00:24:15,960 --> 00:24:19,240 Speaker 2: positive returns in twenty twenty three after disester rush twenty 500 00:24:19,240 --> 00:24:21,880 Speaker 2: twenty two. Right, what do you think here? Do if 501 00:24:21,960 --> 00:24:24,560 Speaker 2: am I in fixing them? Do I go take credit risk? 502 00:24:24,920 --> 00:24:26,000 Speaker 2: How do you guys look at that? 503 00:24:26,160 --> 00:24:26,360 Speaker 6: Yeah? 504 00:24:26,359 --> 00:24:28,480 Speaker 7: So, I think the mistake that many people are still 505 00:24:28,480 --> 00:24:31,280 Speaker 7: making is they're looking at how great T bills were 506 00:24:31,320 --> 00:24:33,200 Speaker 7: in twenty twenty two and the first part of twenty 507 00:24:33,240 --> 00:24:35,400 Speaker 7: twenty three and saying that's our bet, or we're gonna 508 00:24:35,400 --> 00:24:37,280 Speaker 7: go to CDEs or fixing nuities or something like that. 509 00:24:37,280 --> 00:24:39,760 Speaker 7: The altourn a five percent rate. That's the wrong trade. 510 00:24:39,880 --> 00:24:41,240 Speaker 7: And the reason it's the wrong trade is if you 511 00:24:41,240 --> 00:24:44,280 Speaker 7: look at the history of investment grade bonds and high 512 00:24:44,320 --> 00:24:47,160 Speaker 7: yield bonds during a time when the FED is easing, 513 00:24:48,040 --> 00:24:50,919 Speaker 7: there have been historically great returns up ranging up as 514 00:24:51,000 --> 00:24:54,760 Speaker 7: high as fifty percent sometimes, So this idea that five 515 00:24:54,800 --> 00:24:57,520 Speaker 7: percent is the best thing anymore has to vanish. So 516 00:24:57,600 --> 00:24:59,199 Speaker 7: we look at a couple of scenarios. You look at 517 00:24:59,240 --> 00:25:04,040 Speaker 7: soft landing, hard landing, no landing. As long as inflation 518 00:25:04,240 --> 00:25:07,399 Speaker 7: is not resurgent, right, as long as that key measure 519 00:25:07,480 --> 00:25:11,120 Speaker 7: stays low, I think bonds do pretty decently. And then 520 00:25:11,200 --> 00:25:13,879 Speaker 7: that one contingency, which I do think you have to address, 521 00:25:13,920 --> 00:25:17,199 Speaker 7: the possibility of inflation comes higher that could put bonds 522 00:25:17,800 --> 00:25:19,600 Speaker 7: underwater against you need to be. That's why I say 523 00:25:19,600 --> 00:25:21,719 Speaker 7: agile and unconstrained with your bond approach. 524 00:25:21,920 --> 00:25:25,480 Speaker 3: So when you go heavy into cash, it's more a 525 00:25:25,520 --> 00:25:28,959 Speaker 3: reflection of what you expect the soccer bond markets to do. 526 00:25:29,160 --> 00:25:31,480 Speaker 3: It's not that yield you're getting any cash in a 527 00:25:31,480 --> 00:25:33,960 Speaker 3: money market fund or wherever, or T bills that is 528 00:25:34,040 --> 00:25:35,720 Speaker 3: influencing the decision exactly. 529 00:25:35,720 --> 00:25:38,080 Speaker 7: We're we're just going defensive. We're not making a prediction. 530 00:25:38,160 --> 00:25:39,639 Speaker 7: We're just reacting and what's happened to the markets, so 531 00:25:39,720 --> 00:25:40,639 Speaker 7: we're just going defensive it. 532 00:25:41,320 --> 00:25:43,840 Speaker 2: So when I looked at the fixing come returns for 533 00:25:43,880 --> 00:25:46,160 Speaker 2: twenty twenty three, I was really surprised to see that 534 00:25:46,400 --> 00:25:48,280 Speaker 2: the real money was made in high yield, you know, 535 00:25:48,440 --> 00:25:51,960 Speaker 2: kind of a thirteen fourteen percent total return, and that's 536 00:25:51,960 --> 00:25:54,000 Speaker 2: in the midst of everybody every day talking about a 537 00:25:54,000 --> 00:25:55,840 Speaker 2: recession where I would think you wouldn't want to take 538 00:25:55,880 --> 00:25:58,520 Speaker 2: credit risk. Why did HI yield do so well as year? 539 00:25:58,760 --> 00:26:01,240 Speaker 7: Well, I think it's just a function of a couple 540 00:26:01,280 --> 00:26:03,639 Speaker 7: of things. One of the main things is that you know, 541 00:26:03,760 --> 00:26:06,120 Speaker 7: earlier in the earlier in twenty twenty three, highild bonds 542 00:26:06,119 --> 00:26:08,800 Speaker 7: were yielding close to nine percent, right, So if that's 543 00:26:08,840 --> 00:26:11,560 Speaker 7: your starting place before you have any appreciation, that potentially 544 00:26:11,600 --> 00:26:13,000 Speaker 7: looks very good. And then the fact that we had 545 00:26:13,000 --> 00:26:15,440 Speaker 7: this strong fourth quarter and high old bonds rally a 546 00:26:15,480 --> 00:26:17,040 Speaker 7: lot and fourth quarter. So what you were talking about 547 00:26:17,080 --> 00:26:19,280 Speaker 7: earlier is a is a big part of what happened. 548 00:26:19,480 --> 00:26:22,000 Speaker 3: And fell In true Costanza fashion, it looks like you've 549 00:26:22,000 --> 00:26:25,600 Speaker 3: invented your own holiday here, the National Investment Risks Day. 550 00:26:25,640 --> 00:26:26,320 Speaker 3: What's that all about? 551 00:26:26,480 --> 00:26:29,360 Speaker 7: Yeah, So someone of my staff created this on my birthday, 552 00:26:29,440 --> 00:26:32,639 Speaker 7: January the nineteenth, and it's actually registered with the National 553 00:26:32,760 --> 00:26:35,320 Speaker 7: Archives all day. You can find it. 554 00:26:35,200 --> 00:26:37,399 Speaker 3: The fest of us for investors, And we used to. 555 00:26:37,400 --> 00:26:39,640 Speaker 7: Have an acronym policy, but now we've called it NERD 556 00:26:39,720 --> 00:26:43,600 Speaker 7: Day and ird. But here's the thing is, like we 557 00:26:43,600 --> 00:26:48,840 Speaker 7: we continually watch these investments that are super horrible ideas 558 00:26:48,880 --> 00:26:51,720 Speaker 7: become very popular and then maybe have trillions of dollars 559 00:26:51,800 --> 00:26:54,800 Speaker 7: of net worth. And what's so fascinating is that often 560 00:26:55,080 --> 00:26:59,560 Speaker 7: the biggest financial institutions in the world like get on board. 561 00:26:59,840 --> 00:27:02,199 Speaker 7: And so what we're trying to do each year is 562 00:27:02,280 --> 00:27:05,240 Speaker 7: look at things that are like that, things that are 563 00:27:05,600 --> 00:27:06,520 Speaker 7: absolutely crazy. 564 00:27:06,560 --> 00:27:07,920 Speaker 3: What are the most. 565 00:27:07,840 --> 00:27:10,240 Speaker 7: Insane ideas that happen In twenty twenty three, we have 566 00:27:10,280 --> 00:27:14,640 Speaker 7: an esteem staff like the behavioral economist Dan Crosby, Brian Portnoy, 567 00:27:14,720 --> 00:27:17,760 Speaker 7: and I think even you know Bloomberg columnist is coming 568 00:27:17,760 --> 00:27:19,159 Speaker 7: on to oversee the webinar. 569 00:27:19,320 --> 00:27:20,800 Speaker 3: So we're looking forward to that. 570 00:27:21,240 --> 00:27:23,840 Speaker 2: So with the gym in twenty twenty four, what are 571 00:27:23,840 --> 00:27:25,439 Speaker 2: you going to stay? What are you staying away from? Here? 572 00:27:25,480 --> 00:27:27,800 Speaker 2: Is there's something here? I don't know if it's geopolitical 573 00:27:27,880 --> 00:27:30,480 Speaker 2: risk that's causing me to shy away from something. What 574 00:27:30,480 --> 00:27:31,639 Speaker 2: do you stay away from? Do you think at this 575 00:27:31,680 --> 00:27:33,040 Speaker 2: early stage. 576 00:27:32,800 --> 00:27:35,880 Speaker 7: Well, at the moment it's cash, okay, at the moment, 577 00:27:35,880 --> 00:27:37,720 Speaker 7: you just stay away from T bills because I think 578 00:27:37,720 --> 00:27:41,200 Speaker 7: that's the losing trade. Now I say that understanding that 579 00:27:41,200 --> 00:27:43,919 Speaker 7: that things can adapt very quickly. I mean, we're seeing 580 00:27:44,560 --> 00:27:48,919 Speaker 7: clearly we have really a strong sentiment and sentiment indicators 581 00:27:49,000 --> 00:27:50,560 Speaker 7: kind off the charts coming into the end of the year. 582 00:27:50,760 --> 00:27:52,600 Speaker 7: So just that alone would say that we could have 583 00:27:52,640 --> 00:27:54,960 Speaker 7: a downturn here. I don't know how big it could be, 584 00:27:56,000 --> 00:27:58,640 Speaker 7: but I just think you know, if you've already missed 585 00:27:58,640 --> 00:28:00,879 Speaker 7: twenty twenty three, if you were in cash and you 586 00:28:00,920 --> 00:28:02,960 Speaker 7: didn't experience what we had in the fourth quarter, but 587 00:28:03,000 --> 00:28:05,760 Speaker 7: also the rest of the year, that doesn't bode well 588 00:28:05,800 --> 00:28:07,520 Speaker 7: for what may happen in twenty twenty four. If you 589 00:28:07,560 --> 00:28:08,280 Speaker 7: stay in cash. 590 00:28:08,160 --> 00:28:10,159 Speaker 3: Right now, yeah, well fell in quickly. We only have 591 00:28:10,160 --> 00:28:12,760 Speaker 3: about a minute left. But a lot of people pooh 592 00:28:12,760 --> 00:28:15,520 Speaker 3: pooh crypto and bitcoin these days, But with anit CF 593 00:28:15,560 --> 00:28:18,280 Speaker 3: coming up, I gotta think crypto could be attractive to 594 00:28:18,280 --> 00:28:19,600 Speaker 3: a trend filer. Am I Am? I wrong? 595 00:28:19,800 --> 00:28:24,000 Speaker 7: Well, No, crypto is attractive to one of those three 596 00:28:24,040 --> 00:28:28,320 Speaker 7: top categories for the dembest ideas. So here's the trifecta. 597 00:28:28,440 --> 00:28:30,800 Speaker 7: You need to have something that has no asset value, 598 00:28:31,080 --> 00:28:33,440 Speaker 7: something that has no income and no potential for income, 599 00:28:33,880 --> 00:28:36,840 Speaker 7: and has just appreciated eighteen million percent in the last 600 00:28:36,840 --> 00:28:39,360 Speaker 7: twenty years. Right, So if you have all three of those, 601 00:28:39,480 --> 00:28:41,720 Speaker 7: that's like potential dumbest. 602 00:28:41,360 --> 00:28:42,600 Speaker 3: Investment of twenty twenty three. 603 00:28:43,120 --> 00:28:45,560 Speaker 2: Phil Tates, thanks so much for joining us, Philtase, he's 604 00:28:45,600 --> 00:28:50,640 Speaker 2: the CEO founder Tay's Asset Management. Some really excellent performance numbers. 605 00:28:50,800 --> 00:28:53,280 Speaker 2: Appreciate getting a few minutes of his time. The S 606 00:28:53,280 --> 00:28:56,080 Speaker 2: and P five hundred off about six tens of one percent, 607 00:28:56,120 --> 00:28:59,040 Speaker 2: the Doubt absolutely unched on the day, nothing happened in there, 608 00:28:59,080 --> 00:29:02,000 Speaker 2: the Nastak off about one point four percent, the Russell 609 00:29:02,080 --> 00:29:04,000 Speaker 2: kind of hanging in there in terms of relative performance, 610 00:29:04,120 --> 00:29:06,600 Speaker 2: down only a quarter of one percent. So a lot 611 00:29:06,600 --> 00:29:09,600 Speaker 2: of those technicians like to see again the broadening out 612 00:29:09,640 --> 00:29:12,280 Speaker 2: of the market, see some of the small cappers do well, 613 00:29:12,360 --> 00:29:13,120 Speaker 2: or certainly seeing that. 614 00:29:13,280 --> 00:29:17,320 Speaker 6: Today you're listening to the Tape Canser Live program Bloomberg 615 00:29:17,360 --> 00:29:20,960 Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the 616 00:29:21,040 --> 00:29:24,280 Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 617 00:29:24,280 --> 00:29:27,120 Speaker 6: You can also listen live on Amazon Alexa from our 618 00:29:27,120 --> 00:29:32,200 Speaker 6: flagship New York station, Just Say Alexa Play Bloomberg eleven thirty. 619 00:29:33,080 --> 00:29:34,760 Speaker 2: Michael Reagan and Paul Sweeney were live here in a 620 00:29:34,760 --> 00:29:38,160 Speaker 2: Bloomberg Interactive, Gropper Studio or streaming live on YouTube, so 621 00:29:38,200 --> 00:29:41,440 Speaker 2: you can check us out there. Unfortunately, there's no shortage 622 00:29:41,480 --> 00:29:45,920 Speaker 2: of geopolitical hotspots around the world, and we're fortunate to 623 00:29:45,920 --> 00:29:48,440 Speaker 2: have someone who can really help us stay on top 624 00:29:48,480 --> 00:29:50,440 Speaker 2: of it all. That's Mick mulroy. He's the co founder 625 00:29:50,440 --> 00:29:53,080 Speaker 2: of the Lobo Institute. That's just the beginning. He's a 626 00:29:53,120 --> 00:29:55,760 Speaker 2: former Deputy Assistant Secretary of Defense for the Middle East 627 00:29:56,080 --> 00:29:59,800 Speaker 2: at the US Department of Defense, former paramilitary operations officer, 628 00:30:01,280 --> 00:30:05,680 Speaker 2: and then for many many years a US Marine Infantry officer. 629 00:30:06,200 --> 00:30:09,960 Speaker 2: We thank him for all of his service here. Sincerely, Mick, 630 00:30:10,000 --> 00:30:12,440 Speaker 2: I don't know where to start. There's so many hotspots 631 00:30:12,480 --> 00:30:14,880 Speaker 2: around the world. Let's just start in the Middle East. 632 00:30:15,440 --> 00:30:18,480 Speaker 2: I guess the latest headline is Iran is kind of 633 00:30:18,840 --> 00:30:22,520 Speaker 2: poking around there. What's your latest assessment on what's happening 634 00:30:22,840 --> 00:30:24,640 Speaker 2: there in the greater Middle East these days? 635 00:30:27,200 --> 00:30:29,240 Speaker 8: So great to be with you guys in happy New Year. 636 00:30:29,400 --> 00:30:32,680 Speaker 8: I think obviously Iran's been poking around all this the 637 00:30:32,920 --> 00:30:35,880 Speaker 8: entire time. They are the common denominator behind him, ask 638 00:30:35,920 --> 00:30:40,120 Speaker 8: as the Huthis and the militias that keep attacking our 639 00:30:40,160 --> 00:30:44,120 Speaker 8: positions in Syria and Iraq. But now they are entering 640 00:30:44,720 --> 00:30:47,560 Speaker 8: the Red Sea with one of their naval vessels, which 641 00:30:47,600 --> 00:30:51,920 Speaker 8: looks like they want to be somewhat confronting the United 642 00:30:51,920 --> 00:30:54,959 Speaker 8: States without confronting and certainly looking like they are, And 643 00:30:55,000 --> 00:30:57,400 Speaker 8: that's of course not going to be helpful when it 644 00:30:57,400 --> 00:31:00,880 Speaker 8: comes to the US interest in containing this conflict in 645 00:31:00,920 --> 00:31:04,280 Speaker 8: Gaza to Gaza and not spreading to a regional war. 646 00:31:04,800 --> 00:31:06,320 Speaker 3: Well, Beck, I was going to ask you, what is 647 00:31:06,400 --> 00:31:09,040 Speaker 3: the chance of that happening? I mean, could this really 648 00:31:09,960 --> 00:31:12,880 Speaker 3: escalate into the type of thing where the US and 649 00:31:12,960 --> 00:31:16,200 Speaker 3: Iran are fighting more directly? Is that a threat these days? 650 00:31:18,320 --> 00:31:20,040 Speaker 8: So I do think it's a threat. It's something we 651 00:31:20,080 --> 00:31:22,520 Speaker 8: don't want. I don't think Iran wants, and it's not 652 00:31:22,880 --> 00:31:26,880 Speaker 8: obviously in any country in the region's interest. I think 653 00:31:26,920 --> 00:31:30,200 Speaker 8: the biggest threat from that comes from Hesba, Lebanese Hezbela, 654 00:31:30,680 --> 00:31:33,959 Speaker 8: who is incurrently in violation of UN resolutions where they 655 00:31:33,960 --> 00:31:38,920 Speaker 8: are up at the border between Lebanon and Israel. Israel's 656 00:31:38,960 --> 00:31:44,800 Speaker 8: made several statements their senior officials, including their Ministure of Defense, 657 00:31:45,280 --> 00:31:48,040 Speaker 8: that they might need to actually take action to push 658 00:31:48,080 --> 00:31:51,000 Speaker 8: them off that border. If that happens, this would be 659 00:31:51,080 --> 00:31:53,920 Speaker 8: expanding substantially, and it's one of the reasons why the 660 00:31:54,000 --> 00:31:56,959 Speaker 8: US set so many naval assets through the region just 661 00:31:56,960 --> 00:32:00,280 Speaker 8: in case it was a significant second front and in 662 00:32:00,320 --> 00:32:03,800 Speaker 8: this conflict, that we would be there potentially to assist 663 00:32:04,440 --> 00:32:07,360 Speaker 8: our Israel if they needed. I don't think that means 664 00:32:07,360 --> 00:32:10,040 Speaker 8: that Iron's going to become directly involved in the conflict. 665 00:32:10,320 --> 00:32:13,360 Speaker 8: I think they're happy to fight to the last proxy force, 666 00:32:13,920 --> 00:32:17,240 Speaker 8: but generally don't want to put their troops into the mix. 667 00:32:17,480 --> 00:32:20,040 Speaker 8: But that's something that's to be determined whether if this 668 00:32:20,160 --> 00:32:24,600 Speaker 8: expands that could happen, or whether Israel takes more strikes 669 00:32:24,600 --> 00:32:27,080 Speaker 8: specifically against Iran if they feel threatened. 670 00:32:27,880 --> 00:32:31,480 Speaker 2: Nick, I guess what's the latest do you think we're 671 00:32:31,520 --> 00:32:35,440 Speaker 2: seeing hearing from the Israelis about kind of where they 672 00:32:35,480 --> 00:32:37,320 Speaker 2: want to take this here. I know they've brought some 673 00:32:37,520 --> 00:32:40,360 Speaker 2: troops home, but is there any change do you think 674 00:32:40,680 --> 00:32:41,760 Speaker 2: to their strategy here? 675 00:32:44,080 --> 00:32:46,480 Speaker 8: So the US, of course has been pushing for this 676 00:32:47,120 --> 00:32:50,520 Speaker 8: new phase, going from what they're calling high intensity combat 677 00:32:50,520 --> 00:32:53,880 Speaker 8: to low intensity conflict. I would point out that doesn't 678 00:32:53,880 --> 00:32:55,440 Speaker 8: mean it's not a conflict. There's still going to be 679 00:32:55,440 --> 00:32:59,920 Speaker 8: combat operations. But I think this withdrawal of five brigades 680 00:33:00,120 --> 00:33:02,600 Speaker 8: is substantial. It was partially because a lot of these 681 00:33:02,680 --> 00:33:05,320 Speaker 8: are reservist and they need to essentially go back to 682 00:33:05,400 --> 00:33:08,360 Speaker 8: their full time occupation, but it does indicate to many 683 00:33:08,680 --> 00:33:11,160 Speaker 8: that this might be that transition, so we might go 684 00:33:11,280 --> 00:33:16,600 Speaker 8: from this large scale combat operations conventional forces to a 685 00:33:16,840 --> 00:33:21,800 Speaker 8: more targeted, precise, intel driven special operations type of mission. 686 00:33:21,800 --> 00:33:22,040 Speaker 5: There. 687 00:33:22,400 --> 00:33:26,280 Speaker 8: That said, it's been clear that Israeli senior officers have 688 00:33:26,400 --> 00:33:28,640 Speaker 8: said that this could last to the entirety of two 689 00:33:28,720 --> 00:33:31,920 Speaker 8: thousand and twenty four, so that we're far from it 690 00:33:32,000 --> 00:33:34,160 Speaker 8: being over. But I think the US would like to 691 00:33:34,200 --> 00:33:39,080 Speaker 8: see this switch into this next phase, which hopefully would 692 00:33:39,080 --> 00:33:43,280 Speaker 8: also have far fewer civilian casualties and the potential to 693 00:33:43,320 --> 00:33:46,600 Speaker 8: increase the humanitarian aid going into the Gaza, which is 694 00:33:46,800 --> 00:33:47,600 Speaker 8: storally needed. 695 00:33:48,200 --> 00:33:50,320 Speaker 3: You know, Mick, if we shift gears a little bit 696 00:33:50,440 --> 00:33:53,880 Speaker 3: to the situation in Ukraine, it seems to me that 697 00:33:53,960 --> 00:33:58,280 Speaker 3: the political will in the US to continue to fund 698 00:33:58,400 --> 00:34:02,600 Speaker 3: the Ukrainian resistances starting to run low, and potentially this 699 00:34:02,920 --> 00:34:05,600 Speaker 3: might be the year where we actually stop funding that 700 00:34:05,680 --> 00:34:10,160 Speaker 3: were What does Ukraine and really the world look like 701 00:34:10,360 --> 00:34:13,560 Speaker 3: if that's the case, I mean, is it just pretty 702 00:34:13,600 --> 00:34:17,120 Speaker 3: much an instant Russian takeover of Ukraine, or how do 703 00:34:17,120 --> 00:34:19,120 Speaker 3: you see that plane out? 704 00:34:20,120 --> 00:34:22,520 Speaker 8: So I don't think it'd be an instant Russian takeover 705 00:34:22,640 --> 00:34:25,839 Speaker 8: Ukraine because of the Ukrainians. They will fight to the end. 706 00:34:25,840 --> 00:34:28,320 Speaker 8: They've proven that, and I think we should take note 707 00:34:28,360 --> 00:34:30,719 Speaker 8: of that because if you remember when this started, a 708 00:34:30,760 --> 00:34:34,879 Speaker 8: lot of very senior military analysts, including intelligence services, we're 709 00:34:34,880 --> 00:34:38,319 Speaker 8: predicting their fall within weeks, and look where we are now. 710 00:34:38,920 --> 00:34:40,600 Speaker 8: You know, when it comes to the United States credibility, 711 00:34:40,719 --> 00:34:42,239 Speaker 8: I think it would be shocked to be frank, this 712 00:34:42,360 --> 00:34:46,040 Speaker 8: is a partner who is in an existential fight. If 713 00:34:46,080 --> 00:34:48,759 Speaker 8: we were to pull out now, our credibility when it 714 00:34:48,800 --> 00:34:51,600 Speaker 8: comes to that, I think would go down substantially. And 715 00:34:51,640 --> 00:34:53,839 Speaker 8: it's not just it is I think the morally right 716 00:34:53,880 --> 00:34:56,560 Speaker 8: thing to do for a partner that's been invaded by 717 00:34:57,000 --> 00:34:59,719 Speaker 8: an adversary of ours, but it's also in our own age. 718 00:35:00,200 --> 00:35:03,400 Speaker 8: I mean, last month alone, according to multiple reports, the 719 00:35:03,480 --> 00:35:07,319 Speaker 8: Russians lost thirty thousand soldiers. Well, I mean, think about that, 720 00:35:07,520 --> 00:35:11,759 Speaker 8: thirty thousand soldiers. They have degraded the Russian military capacity 721 00:35:11,920 --> 00:35:14,560 Speaker 8: below fifty percent of what it was before this started. 722 00:35:14,880 --> 00:35:18,560 Speaker 8: That means every dime we've spent has added to our 723 00:35:18,600 --> 00:35:22,080 Speaker 8: own national security benefit. It would make no sense to me, 724 00:35:22,400 --> 00:35:24,279 Speaker 8: and I don't do politics, but it makes no sense 725 00:35:24,280 --> 00:35:26,600 Speaker 8: to me why we would continue that support. It's in 726 00:35:26,680 --> 00:35:29,719 Speaker 8: our own interest. Every dollar we spent on that assists 727 00:35:29,800 --> 00:35:32,040 Speaker 8: us when it comes to our own national defense. 728 00:35:32,760 --> 00:35:35,120 Speaker 2: Nick as we get into I can't remember what year 729 00:35:35,120 --> 00:35:38,120 Speaker 2: we are of this war unfortunates much longer than anyone 730 00:35:38,160 --> 00:35:41,160 Speaker 2: would like. Is there any expectation that there will be 731 00:35:41,200 --> 00:35:46,520 Speaker 2: a negotiated settlement here? Admirals Stravitis, former head of NATO, 732 00:35:46,880 --> 00:35:50,040 Speaker 2: made the comment recently to us that he believed is 733 00:35:50,040 --> 00:35:54,120 Speaker 2: something like a Korea peace for land type situation is 734 00:35:54,160 --> 00:35:56,560 Speaker 2: probably the best outcome. 735 00:35:58,400 --> 00:36:01,759 Speaker 8: So that certainly could happen. I think what the Ukrainians 736 00:36:01,800 --> 00:36:06,200 Speaker 8: need is to really push the capacity of Russia to 737 00:36:06,239 --> 00:36:09,720 Speaker 8: stay in Crimea, which will push them to the negotiation table. 738 00:36:09,960 --> 00:36:12,319 Speaker 8: I think right now what the US can do is 739 00:36:12,360 --> 00:36:15,120 Speaker 8: to really start providing them more offensive weapon systems. We 740 00:36:15,239 --> 00:36:18,239 Speaker 8: started that they started their counter offensive before they had 741 00:36:18,280 --> 00:36:20,920 Speaker 8: anything near what we would need to do what they 742 00:36:20,960 --> 00:36:23,680 Speaker 8: have been trying to do, which means more or F 743 00:36:23,760 --> 00:36:26,400 Speaker 8: sixteen's which are just getting there, more main battle tanks 744 00:36:26,600 --> 00:36:29,960 Speaker 8: and more long range artillery, which really has been a 745 00:36:30,000 --> 00:36:32,880 Speaker 8: game changer. If they can start challenging Russ's ability to 746 00:36:32,920 --> 00:36:36,359 Speaker 8: stay in Crimea, That's when I think President Puutin will say, 747 00:36:36,600 --> 00:36:39,080 Speaker 8: maybe I need to start talking about a negotiated settlement. 748 00:36:39,239 --> 00:36:41,360 Speaker 8: And then I think it's up to the Ukrainian people 749 00:36:41,480 --> 00:36:46,040 Speaker 8: what they're willing to potentially give for peace, and that's 750 00:36:46,040 --> 00:36:48,920 Speaker 8: something I think we should support. We should also allow 751 00:36:49,000 --> 00:36:51,879 Speaker 8: them to make that decision and not push it on them, you. 752 00:36:51,800 --> 00:36:53,799 Speaker 3: Know, Mick, As Paul said, there sure are a lot 753 00:36:53,800 --> 00:36:56,399 Speaker 3: of hotspots around the world these days. So I want 754 00:36:56,400 --> 00:36:58,120 Speaker 3: to take you over to China a little bit too. 755 00:36:58,160 --> 00:37:00,880 Speaker 3: You know. One of the big concerns in years was 756 00:37:01,320 --> 00:37:06,080 Speaker 3: some aggression from China towards Taiwan. We seem to have 757 00:37:06,160 --> 00:37:09,319 Speaker 3: dodged that bullet, but am I being sort of too optimistic? 758 00:37:09,360 --> 00:37:12,120 Speaker 3: There is that still a risk going into twenty twenty 759 00:37:12,120 --> 00:37:15,080 Speaker 3: four that we see some sort of aggression towards Taiwan. 760 00:37:17,320 --> 00:37:19,640 Speaker 8: So I do think it's still a risk and we 761 00:37:19,640 --> 00:37:22,040 Speaker 8: should not take that lightly. I think what we're doing 762 00:37:22,080 --> 00:37:25,080 Speaker 8: in Ukraine actually impacts that. When China looks at the 763 00:37:25,160 --> 00:37:27,680 Speaker 8: type of partner the United States is to the Ukrainians 764 00:37:27,800 --> 00:37:31,120 Speaker 8: after Russia essentially invaded them. They're going to look at 765 00:37:31,320 --> 00:37:33,960 Speaker 8: potentially what we might do with Taiwan if they were 766 00:37:33,960 --> 00:37:36,440 Speaker 8: to either do a blockade or an actual attempt to 767 00:37:36,560 --> 00:37:39,760 Speaker 8: invade a Taiwan. So that's the first thing. The second 768 00:37:39,800 --> 00:37:41,759 Speaker 8: thing is that the Chinese military is not ready to 769 00:37:41,840 --> 00:37:44,400 Speaker 8: do this yet. So it's not that we've dodged a bullet. 770 00:37:44,520 --> 00:37:47,400 Speaker 8: They just don't have the capacity. I don't think to 771 00:37:47,480 --> 00:37:50,800 Speaker 8: even do a blockade that would actually hold up yet. 772 00:37:50,920 --> 00:37:54,560 Speaker 8: But they're driving that direction. They're significantly improve in their navy, 773 00:37:54,760 --> 00:37:59,760 Speaker 8: their significant and improving their overall military capacity in part 774 00:38:00,040 --> 00:38:02,040 Speaker 8: so they could do this in the future if they 775 00:38:02,280 --> 00:38:04,160 Speaker 8: like to do that. Right now, I think we need 776 00:38:04,200 --> 00:38:06,440 Speaker 8: to be a good partner to show that we're a 777 00:38:06,480 --> 00:38:09,719 Speaker 8: good partner. So they have that understanding, and Taiwan obviously 778 00:38:09,840 --> 00:38:12,920 Speaker 8: needs to take the lessons learned from Ukraine and start 779 00:38:13,000 --> 00:38:16,120 Speaker 8: looking at how they can make themselves a harder target, 780 00:38:16,280 --> 00:38:20,200 Speaker 8: because that might be ultimately what makes the Chinese decide 781 00:38:20,280 --> 00:38:21,120 Speaker 8: it's not worth it. 782 00:38:21,280 --> 00:38:23,520 Speaker 2: Hey, Mick, just about twenty seconds left. Where could we 783 00:38:23,560 --> 00:38:26,840 Speaker 2: see a positive surprise in some of these hot spots 784 00:38:26,840 --> 00:38:27,440 Speaker 2: around the world. 785 00:38:27,480 --> 00:38:32,120 Speaker 8: This year, So a positive surprise. If you just said 786 00:38:32,120 --> 00:38:35,560 Speaker 8: a surprise, that an easy edge, a positive surprise. I 787 00:38:35,640 --> 00:38:38,680 Speaker 8: would hope that once we get all the weapons systems 788 00:38:38,719 --> 00:38:42,160 Speaker 8: that we've promised and we support Ukraine, that Ukraine could 789 00:38:42,200 --> 00:38:45,520 Speaker 8: get to a point where Putin realizes he could be 790 00:38:45,880 --> 00:38:49,120 Speaker 8: in a phase of catastrophic failure. I think strategically he 791 00:38:49,160 --> 00:38:53,360 Speaker 8: has already failed, but a catastrophic failure is regarding Ukraine itself, 792 00:38:53,560 --> 00:38:56,640 Speaker 8: and that would push him to the negotiation table. But 793 00:38:56,719 --> 00:38:59,880 Speaker 8: it requires all of the partners of Ukraine are allies, 794 00:39:00,080 --> 00:39:02,640 Speaker 8: to continue support and of course them do their job 795 00:39:02,680 --> 00:39:05,239 Speaker 8: which they are, which is fighting tooth and nail to 796 00:39:05,239 --> 00:39:07,399 Speaker 8: get back every piece of territory that Russia took. 797 00:39:07,480 --> 00:39:09,680 Speaker 2: All right, very good as always. Mcmutley, co founder of 798 00:39:09,719 --> 00:39:12,799 Speaker 2: the Lobo Institute, giving us the latest on the geopolitical 799 00:39:12,840 --> 00:39:15,000 Speaker 2: issues out there facing a lot of folks. 800 00:39:16,719 --> 00:39:19,799 Speaker 1: Thanks for listening to the Bloomberg Markets podcasts. You can 801 00:39:19,840 --> 00:39:23,640 Speaker 1: subscribe and listen to interviews at Apple Podcasts or whatever 802 00:39:23,719 --> 00:39:27,440 Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 803 00:39:27,640 --> 00:39:29,560 Speaker 1: at Matt Miller nineteen seventy three. 804 00:39:30,000 --> 00:39:32,400 Speaker 2: And I'm fall Sweeney. I'm on Twitter at pt Sweeney 805 00:39:32,520 --> 00:39:35,160 Speaker 2: before the podcast. You can always catch us worldwide at 806 00:39:35,200 --> 00:39:36,959 Speaker 2: Bloomberg Radio